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Business Roundtable: Trusted Advisers

Posted: April 2, 2014 3:00 p.m.
Updated: April 2, 2014 3:00 p.m.

It takes more than throwing up a shingle, or building a sophisticated looking website, to build and grow a business.

Honed skills, sales, marketing and advertising are all key elements, but how does a business distinguish itself from the pack of competitors?

“Trusted advisor” can be cliché – unless a business person builds the credibility to back up the claim.

The Santa Clarita Valley Business Journal sat down with business leaders to learn what really constitutes a trusted advisor, and how ties to the local community matter more than in Santa Clarita than many other markets.

Joining us for the discussion were Calvin Hedman, founder and president of Hedman Partners; Jeff Hacker, attorney, Hacker Law Group; Tamara Gurney, president and CEO, Mission Valley Bank; and Dennis King, managing partner with KKAJ (King, King, Alleman & Jensen).

How do you define trust?

CALVIN HEDMAN: Being a trusted adviser is not something you can claim -- it’s something you’ve earned based on actions with your clients and the community. Someone else must say you’re their trusted adviser. It’s an esteemed title that people strive to achieve.

It’s demonstrated through integrity, dependability and a fiduciary relationship. I think that’s the goal for all of us here.

JEFF HACKER: We’re fiduciaries. When you're a fiduciary, you're vested with having the utmost care, skill and confidence over and above others. When you talk about what constitutes trust, we all start off aiming to establish and maintain a fiduciary relationship with clients, the community and the public. People must bestow it on you based on your ethics, integrity and community interaction.

In my line of work, trust isn't necessarily equivalent with results and success. It's more based on your conduct with your clients, the community and the world around you.

I was recently in a trial, and the jury liked my client but not the defendant. A member of the jury said, essentially, they didn’t like the other lawyer. Sometimes, like is a euphemism for trust.

When I'm in front of a jury, I have to establish that the jury is going to like me and believe me. In that situation, the jury said, at the end of the day, “We trust Hacker.”


Does delivery matter as much as the message itself?

HEDMAN: It’s difficult to quantitatively or objectively assess the services you’re providing, so for a lot people, the outward appearances matter.

As CPAs, people know we’ve accomplished a certain level of certification, but beyond that, they think all CPAs are the same. But we're not. We have different specialties, types of clients, etc.

The right CPA can provide added value. Because of that, clients might make an uninformed decision.

They can’t tell the difference in capabilities, so what do they turn to? Price. This may not be the best factor to base a decision on.

TAMARA GURNEY: If I had to identify the components of a trusted advisor, I’d focus on two things: the skill, knowledge and expertise you bring to the table; and the the caring factor in the delivery. It's going that extra mile because you care about their success.

It may not even be the service you can provide but pointing them to another trusted expert. I know to reach out to people who I trust and value to take care of my clients. That demonstrates trust and care to my clients and makes them trust me.

It’s hard to quantify how someone decides to trust you over another. It’s in that delivery. Delivery is something you can't touch, but you can feel it. It comes from the core and caring about the true outcome.


Is building trust the same as building a new business, in the sense that it just takes time to gain momentum?

DENNIS KING: I grew up with this attitude that it’s better to be trusted than to be loved. If people can’t trust you, you can't form meaningful relationships. But how do the people I work with know I can be trusted? For a new business, that would be very hard. It takes time.

We’re in a business where people have to trust us. We’re doing something they don’t know how to do. It creates a weighty responsibility to be trustworthy and to let them know we can be trusted.

We can provide so much better service if they can trust us. The toughest time I have is with clients who are endlessly skeptical. Sometimes you almost have to convince them to do the best thing for them.

When you start off, you have to hold to your principles over time. You don’t want to go for the quick fix. If you try to sell that you're trustworthy, that's a hard sell -- you’ll look slick.

HACKER: Most clients who have had previous dealings with attorneys have some uncomfortability for many reasons -- some genuine, some not. I have to establish I'm not the previous attorney -- that I'm not cut from the same cloth.

There is a fear of the unknown. When you’re talking about accounting principles, the average person doesn’t have an idea about that. Likewise, most clients don’t have an understanding about the intricacies or language of law, and it can be scary. It’s like being in a foreign world.

I try not to speak like a lawyer, so there's an understanding of what I’m communicating. Ultimately, the client is making substantive decisions that will affect the outcome of his or her case. Hopefully, they’re doing it with reason and informed knowledge. So speaking the language of my clients rather than the vernacular of my industry is very important.

HEDMAN: It's just like when you go to the doctor, and you don’t understand any of it. You wish you had it all written down.

Part of caring is making sure the person understands. It may take multiple times to explain things because it’s really complex. I try to show patience with everyone. I don’t want to rush anyone through a decision. Once they’re informed, they can make the best decision in their case.

HACKER: It’s also important to coordinate and communicate with other professions. There’s more to it, sometimes, than just the legal decisions.

For example, if someone is buying a business, there are tax ramifications. The buyer or seller needs to understand what the tax implications are and get a CPA’s advice.

GURNEY: That’s key in the banking space. We want to be invited to the table when they do their planning. We may offer finance advice that has legal or tax ramifications. We want that collaborative voice at the table, so we can work together to refine our recommendations and provide the best end result.

HEDMAN: Some clients may be afraid to talk to the bank because it may be bad news, so we sit down together. As a team, let's work this out. The banker is not the bad person -- they are here to help and take care of you.

GURNEY: It’s like that medical analogy. You don’t want to go to the doctor and not provide all your symptoms. How would get the medicine you need?

So we tell clients to lay everything out on the table. If we don’t know something, we can’t help you.

KING: I had a recent situation where I referred a client to a banker. The client came back and said they had been turned down. So I called the banker, and I explained it in a different way. And it worked. People need to trust their advisers because, sometimes, they can bring something else to the table.

You have to have a team to do things. It takes the coordination of all the various professional expertise. It’s a symbiotic relationship, and we all help each other out. From that, everything else follows.

People come to us because they need us. If they could do it themselves, they wouldn’t come to us. We really want our clients to understand what we’re doing and why, and agree with the decisions.

When things get complicated and confusing, most people want to throw up their hands and be done with it. It would be easy to give up on the client and just handle it, but they need someone to help them through these complicated transactions.

GURNEY: When a client asks a question, I train my staff not to just reply with an answer but to find out why the client is asking that question in the first place. That’s one of my pet peeves.

Try to figure out why they’re asking that question leads to finding something bigger. That’s what makes a trusted adviser. You can’t just worry about giving the right answer; you need to worry about why they’re here asking you that question, too.

Build on that and get the relationship going to understand what's going on in the client’s whole world. If it’s just a transactional experience, it's not a trusted advisor. There's always more to it.

HACKER: There is a fundamental principle here: You have to take time with your client to earn their trust and confidence.

You may have multiple clients you have to provide advice for, but taking the time is part of going the extra mile. It's part of caring.

KING: You have to have a desire for excellence that supersedes your desire to make money. If we’re going to do something, we have to do it right.

You can't be compromised by worrying about a budget or making money. Otherwise, you do a poor job, and you don’t serve anybody in that case.

Ultimately, you have to face that decision, but the decision should be whether or not to start at all. You don’t get started and then decide you’ll do a halfway job because you don’t think you’ll get paid well.

If you practice that over and over, people started to understand.


How much more does relationship-building count in the SCV compared to surrounding markets?

KING: My perception has been that people in the valley like to do business in the valley.

My office used to be in Burbank. Even though I lived out here and was involved here, I hardly got any business here. I got involved with the community because I wanted to. But now being out here, I've noticed it has an entirely different effect.

It’s an interesting phenomenon, and it’s not there in the San Fernando Valley. I could help people in different areas, and it didn’t really matter.

HEDMAN: The relationships are very important for people who both live and work here. For someone who only lives or works here, it may not make any difference.


If you live and work here, can you attract accounts elsewhere?

HEDMAN: Yes. There is not as much of a community mindset in other places.

GURNEY: With my headquarters in Sun Valley, I’ve served the SFV for more than 30 years, and we also have locations out here. The majority of my staff has always lived out here, so we’ve always tried to be very involved.

For whatever reason, though I believe it’s intentional, the SCV has much more of a sense of community than the SFV. It’s not that they don’t have pride in their local area, it's just not as overt and demonstrated as it is here.

People really appreciate when you’re involved in this community and when you give back to this community. They want to pay each other back. I hear much more about buying local and investing your dollars here. I don’t get that as much in the SFV.

HEDMAN: We are defined by the Santa Clarita Valley. For people who have been here a while, the ties are tighter because it used to be smaller.

KING: I grew up in Burbank. “Over the hill” is still a term, and I think that culture has really stayed. When I was on the school board, I thought it was amazing how many kids go through the schools and come back. It's a rare community feel in the state of California. And the physical barrier (mountain ranges) contributes to it.

HACKER: There is also a sense of identity and pride that may be different than the SFV. The identity in the SFV is, more often than not, of the entire valley, rather than separate parts. We also have our own city.

GURNEY: I've heard similar stories about people who live elsewhere not getting local business.


With many services moving online, how do you combat price shopping?

GURNEY: It's definitely changing my world. Your bank is in the palm of your hand now. The infamous “Google it” has changed everyone’s lives. People have become experts.

If I don’t know something about accounting, I’m going to Google it. One of the biggest websites is WebMD -- people are going to self diagnose and treat. So we can self diagnose in other fields, as well.

It's making things impersonal. When looking at the younger generations, I worry about a lot of things. Communication has been at the heart of every serious issue I’ve ever faced in my life, business or personal. We become so distant from communication when we rely on texting.

But you have to deploy the technology to reduce your operating costs and be more efficient. But then we become irrelevant because what we are, as a community bank, is relationship-based. It’s really a challenge to make that work for you while keeping the connection.

There’s so much more to it than what you can Google. What’s your true goal? What are going to do in the next 10 to 15 years? Maybe something we do today can get you there faster. And then we collaborate with our accountants and put a plan together. You lose that when you just Google it.

When you look at the analysis, the cost of having a physical, live-body transaction inside a bank branch is astronomical compared to taking your phone out and transferring money -- we’re talking pennies versus double-digit dollars.

Lately, much of the customer frustration seems to be embedded in technology. When conversations start off on a bad footing, it's human nature to come out with your boxing gloves.


How do you get physical customers?

GURNEY: The old-fashioned way. We keep at it. We try to use the technology in ways that don’t take away from us but complement the relationship-building.

We’re all in this fast-paced, cut-you-off-on-the-freeway mentality, so things that aren’t that important stay automated. But then you provide information through personal touches. We're adding to the conversation so they keep coming back.


How has technology affected law and accounting firms?

KING: When I first started, my 10-key adding machine was my only piece of equipment. It has vastly changed now and made things much more complicated.

When we used to do people’s general ledger, we’d go and grab their books and create a financial statement. Then the PC came out, and everyone thought they could have their accounting done on their PC. They started doing their own accounting. We spent more time cleaning up those books at the end of the year than we used to spend doing them by hand, quarterly.

We’ve come full-circle now. People want us to become totally involved. They don’t even want to deal with the function.

For a time, it kind of hurt us, but now it's opened up whole new doors for us. But bottom line: The personal trusting relationship is really what’s of value still. The bookkeeping is just the tool, and technology now helps us do what we do better and accomplish more.

HACKER: In my line of work, people will Google information, but they may not even know what the problem is -- they may be looking at the wrong law. I want my clients as educated as possible because it makes decision making easier and better.

But what I find challenging about technology is people now expect things instantaneously. But if I’m in a trial, I'm unavailable for eight hours. It comes across as you're not performing or responding.


Everyone makes a mistake at some point, to some degree. How do you recover?

KING: If you do something good for a client, they'll tell maybe a person or two. If you do something bad, they'll tell 15 or 20 people. If you make a mistake and recover successfully, you'll have the best client you've ever had.

Recovery is a huge part of it because you will make mistakes. I’ve found there’s a psychology to it because your client doesn’t want to confront you with a mistake. They build up the courage and prepare an argument in their mind because they anticipate you being defensive. If you readily admit that you made the mistake, you immediately diffuse all that anger and emotion. Now you agree with them.

So the first big step is admitting you did something wrong. Then do something to recover, above and beyond, the damage you’ve caused.

GURNEY: I don't encourage mistakes, but I let people know that they're expected. People do make mistakes, and we need to learn from them.

I had a young woman, many years ago, make a mistake that cost my bank, at the time, about $35,000. She was a great employee, but she came in my office and handed me her resignation letter. I looked at her and said, “Are you out of your mind? I just spent $35,000 on your education. You’re not going anywhere.”

So we sat down and figured out how it happened. That’s something she’ll never forget. And she’ll never do it again.

HACKER: You have to have a culture that allows you to address problems. It is absolutely wrong not to admit, deal with, correct and recover from the mistake.


What if you make a mistake that the customer doesn’t know about?

KING: That’s the real temptation in our business because, quite frankly, we can make mistakes no one will ever see. That' where the crisis of you conscious is.

You have to deal with it quickly. The longer you let a problem fester, the worse it gets.

HEDMAN: It all comes back to the foundation of building trust. It’s integrity.

How you deal with an employee’s mistake reflects on the attitude of your whole team. Use them as part of a solution and as a moment to develop that trust internally.


If you build a level of trust with your employees, does that translate to how they interact with your customers?

ALL: Yes, definitely.

GURNEY: How we treat each other translates to how we treat clients. We need to get rid of that defensiveness.

KING: Fear is a very powerful emotion, but it's not a productive way of motivating people. You have to have the confidence to know you’re doing your best, but if it’s not quite perfect, you’re not going to get nailed for it. You have to maintain that culture and environment where creativity and performance are rewarded.


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